Hensley v. Caietti

• Decision Date: 26 February 1993
• Docket Number: No. C013229,C013229
• Citation: 16 Cal.Rptr.2d 837,13 Cal. App. 4th 1165
• Court: California Court of Appeals
• Parties: Joyce HENSLEY, Plaintiff and Appellant, v. William CAIETTI et al., Defendants and Respondents.

Page 837

16 Cal.Rptr.2d 837

13 Cal.App.4th 1165

Joyce HENSLEY, Plaintiff and Appellant, v.William CAIETTI et al., Defendants and Respondents.

No. C013229.

Court of Appeal, Third District, California.

Feb. 26, 1993.

Certified for Partial Publication.

Review Denied May 13, 1993.

[13 Cal.App.4th 1167] Thomas L. Hodges, Sacramento, for plaintiff and appellant.

Lewis, Carroll & Bacon, Steven A. Lewis and Kenneth E. Bacon, Sacramento, for defendants and respondents.

BLEASE, Acting Presiding Justice.

In this action for attorney malpractice plaintiffJoyce Hensley appeals from a summary judgment in favor of defendantWilliam Caietti predicated upon the bar of the statute of limitations, Code of Civil Procedure section 340.6.The gist of her claim is that defendantWilliam Caietti committed malpractice by inducing her to enter into a binding unfavorable marital settlement agreement.She discharged him soon thereafter, more than one year before filing this action, and obtained new counsel.Nonetheless, she contends the trial court erred in failing to toll the limitations period until Caietti received notice that he was discharged as her attorney.She also contends that the statute should have been tolled until judgment was entered in the marital dissolution action.

In the published portion of the opinion ¹we conclude that the limitations period ran from the date Hensley acted upon her decision to discharge Caietti by engaging new counsel, not from the date Caietti received notice of his discharge.We also conclude that Hensley suffered actual injury, sufficient to start the statute running, when she entered into the binding marital settlement agreement.

We will affirm the judgment.

FACTS AND PROCEDURAL BACKGROUND

Caietti represented Hensley in a marital dissolution action.The marital status was terminated, leaving support and property issues for resolution.On September 28, 1989, Caietti and Hensley and her former spouse and his counsel, Sharon Hoyle, attended a settlement conference on these issues.After negotiation they asked the court to record a stipulated settlement agreement.Hoyle put the terms of the stipulation on the record, allocating property and debts, providing for payments to Hensley to equalize the division of community property, waiving spousal support and the shifting of attorney fees and costs, providing for mutual personal restraining orders, and obligating each party to execute implementing documents.After examining the parties under oath the court approved the stipulation.The court informed them that the settlement was effective immediately and directed Hoyle to prepare the judgment.

On November 3, 1989, Hensley met with Caietti to review a proposed judgment.She told him she was distraught during the settlement negotiations because of verbal abuse then inflicted upon her by her husband and she had not been fully aware of the terms of the stipulation.She reviewed the proposed judgment with Caietti and they had a "terrible argument" and she refused to agree to it.Caietti yelled at her to get out of his office.She considered their attorney-client relationship terminated at this point.

Three days later, on November 6, 1989, Hensley asked Pennee Parker to replace Caietti as her attorney.Parker told Hensley that she could not represent Hensley unless Caietti executed and filed a substitution of attorney.On November 13, 1989, Hensley executed a substitution of attorney document and Parker sent it by mail to Caietti.

On November 14, 1989, Caietti sent a letter to Hoyle informing her that he had reviewed the proposed judgment with Hensley and that there were a couple of changes that he desired to make and that he would return the redraft to her with the changes.Caietti also asked that Hensley's former spouse provide certain bill statements to her and deliver certain personalty to her that was "overlooked" in the stipulation.

On November 16, 1989, Caietti received Parker's letter and the substitution of attorney document.On the following day Caietti sent Hoyle the proposed judgment with changes.In the accompanying letter he explained that he was unable to obtain Hensley's agreement to the judgment before he was informed that she had secured new counsel.Caietti signed the substitution of attorney on November 20, 1989.

The complaint in this malpractice action was filed November 15, 1990.Caietti moved for summary judgment and the trial court granted it with the following explanation."The loss occurred at the tim[ ]e of the stipulation, and was discovered on November 3, 1989.The Statute of Limitations ran November 4, 1990."

DISCUSSION

I

Code of Civil Procedure section 340.6, subdivision (a)(2) provides that the one year period from discovery of attorney malpractice within which an action may be brought is tolled while the "attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred."²

Hensley contends the trial court erred in failing to toll the limitations period under this provision.She argues that Caietti continued to represent her until November 16, 1989, when he received notification of his discharge from her new attorney, Parker, a date within one year of the filing of the malpractice action.Caietti argues for an earlier date outside the one year limitations period, fixed by the point at which "the attorney-client relationship disintegrates to the extent that there is no continuity of professional services from which the alleged malpractice stems...."Caietti's argument is persuasive.

Code of Civil Procedure section 340.6 does not say when a representation is discontinued.The dispositive issue is whether that is judged from the perspective of the attorney or from the perspective of the client.On this record the latter is the better reading.

In general an attorney "continues to represent" the client in pending litigation until the representation is terminated "by operation of law, withdrawal or discharge."(See1 Witkin, Cal. Procedure (3d ed. 1985) Attorneys, § 85, p. 104.)This implicates the law of agency.(Seeid. at §§ 71-94.)"The same agency principles which permit the attorney to terminate his agency (subject to such control as the court may deem proper), are applicable to the client."(Id.§ 82, p. 101.)Under the law of agency "[a]uthority created in any manner terminates when either party in any manner manifests to the other dissent to its continuance or, unless otherwise agreed, when the other has notice of dissent."(Rest.2d Agency, § 119.)

"Time of Termination.The revocation or renunciation is effective when the principal or agent learns that the other no longer consents to the continuance of the authority.Ordinarily, it is also effective when either party has reason to know of it, in accordance with the rule stated in Section 10, or when a notification has been given, in accordance with the rule stated in Section 11.The parties may, however, agree that the revocation or renunciation shall not occur until there is knowledge of the withdrawal of consent, or they may specify particular acts which will constitute notification.

"Until the time when the manifestation is effective, it can be withdrawn by a counter-manifestation; after such time a manifestation of withdrawal of dissent operates as an offer to enter a new relationship on the terms of the old."(Rest.2d Agency, § 119, com. c.)

Under these principles, Caietti "continue[d] to represent [Hensley] regarding the ... [dissolution] matter" at least until the day the letter revoking his representation was delivered to his place of business.(SeeRest.2d Agency, § 11.)Caietti argues for an earlier date, the date upon which his client viewed the relationship at an end.He reasons as follows.

When the client has discovered an attorney's negligence the purpose of Code of Civil Procedure section 340.6 is to toll the period of limitations during the time that the client cannot reasonably be expected to initiate a malpractice action because to do so would disrupt an ongoing attorney-client relationship.Once the client unequivocally decides that the relationship is over application of the tolling provision can no longer serve its purpose and it should be applied no further.

Caietti relies upon the following passage from Laird v. Blacker(1992)2 Cal.4th 606, 618, 7 Cal.Rptr.2d 550, 828 P.2d 691:

"Section 340.6 and its legislative history make clear that once a client has been injured by an adverse judgment, the limitations period commences and is not tolled by filing an appeal absent continuous representation by the trial attorney.(See340.6, subd. (a)(2).)This 'continuous representation' rule was adopted in order to 'avoid the disruption of an attorney-client relationship by a lawsuit while enabling the attorney to correct or minimize an apparent error, and to prevent an attorney from defeating a malpractice cause of action by continuing to represent the client until the statutory period has expired.'(Sen.Com. on Judiciary, 2d reading analysis of Assem.Bill No. 298 (1977-1978 Reg.Sess.)as amendedMay 17, 1977.)"

This conclusion is supported by an article from the California State Bar Journal from which the language used in subdivision (a)(2) of Code of Civil Procedure section 340.6 was taken.(SeeMallen, Panacea or Pandora's Box? A Statute of Limitations for Lawyers(1977)52 Cal.StateBarJ. 22, 26(Panacea );Mallen, An Examination of a Statute of Limitations for Lawyers(1978)53 Cal.StateBarJ. 166.)

Caietti also relies upon several opinions that view Code of Civil Procedure section 340.6, subdivision (a)(2) as an embodiment of the "continuous representation" rule developed under New York common law.(See, e.g., Gurkewitz v. Haberman(1982)137 Cal.App.3d 328, 187 Cal.Rptr. 14.)This view finds support in the Panacea article: "The proviso of subdivision 2 adopts in California the continuous...